Vendors and Other Independent Contractors

This information is provided to assist you in understanding the coverage being offered and does not modify the terms and conditions of any insurance policy, nor imply a claim is covered. Specific coverage terms vary by class of business. See your policy for full details.  

Very often a Special event holder will invite vendors to participate in the organization’s special event.  Vendors may sell food and beverages, or perhaps arts and crafts, such as the hammock vendor in the preceding article.  Vendors are an example of independent contractors.  In addition to vendors, nonprofits may hire independent contractors to provide other necessary activities, such as security or clean up.  If the activity requires a license, such as a security operation, be sure to check that the license is current.  Independent contractors should sign hold harmless agreements protecting the Special event holder and should carry their own insurance.  The independent contractor should provide evidence of this insurance coverage by providing you with a certificate of insurance.  If the independent contractor is one that the Special event holder does business with regularly, or is providing an essential service, the Special event holder should request that it be named as an additional insured on the independent contractor’s insurance policy.  If the independent contractor does not carry insurance, then your organization is placed at risk by its operation.  Remember too, Special event holder’s general liability insurance policy will not protect the independent contractor in the event of an accident arising out of its operations.  And, even though the Special event holder may not be at fault, it could still be pulled into an expensive and time consuming lawsuit, such as the Special event holder in our hammock story, if its vendors are not properly insured for both liability and workers’ compensation.  Here is another example of a Special event holder faced with a lawsuit because its independent contractor was uninsured:

A Special event holder rented a building.  The entry area was dirty, so the Special event holder hired a local cleaning company. The cleaner came and scrubbed the floor and left it wet without any signs indicating that it may be slippery.  A woman walked into the building and slipped on the wet floor breaking her knee. The Special event holder was held financially responsible for the woman’s medical bills because warning cones were not used.  If the cleaner had carried insurance, his or her policy would have probably picked up most of the damages.  And, if the vendor had named the Special event holder as an additional insured, the cleaner’s policy would also have defended the Special event holder.  But since the cleaner was uninsured, the Special event holder bore the cost of everything.

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